SOCPA adopts the amendments introduced by the International Board to both International Financial Re

The Saudi Organization of Chartered and Professional Accountants, represented by the Accounting Standards Board, approved the amendments made by the International Accounting Standards Board to both International Financial Reporting Standard No. 9 and International Financial Reporting Standard No. 7 for Accounting and Disclosure of Contracts Related to Nature-Based Electricity.
 
Amendments to IFRS 9 have added requirements to help assess whether contracts related to nature-based electricity (described in paragraph 2/3a of the standard) are entered into and retained for the purpose of obtaining electricity according to the expected usage needs of the facility. To improve disclosure in accordance with the requirements of International Financial Reporting Standard No. 7.
The most prominent features of the amendment to the two standards are the following:

1. Considering that the entity has entered into the contract and continues to retain it, in accordance with its expected electricity usage needs if it achieves, or expects to achieve, net electricity purchases during the contract period. Therefore, this contract itself is not within the scope of IFRS 9 unless the entity applies the option permitted by paragraph 2/5 of the standard.
2. The addition of application guidelines to evaluate whether the facility achieved net electricity purchases during the contract period.
3. Allow the facility to designate as its hedged item the variable nominal amount in expected electricity transactions that corresponds to the variable amount of nature-dependent electricity that the power generation facility is expected to provide.
4. Establishing disclosure requirements (in IFRS 7) for information that enable users of an entity's financial statements to understand the effects of contracts associated with nature-based electricity on the amount of its future cash flows, their timing and surrounding uncertainty, and on its financial performance.

These amendments can be viewed by clicking here.